Growing Toward ‘Independence Day’

MFA Oil pursuing next-generation
biofuel project to reap energy from
non-productive land

By Dan Campbell, editor

o seed would ever be planted if a farmer didn’t first have a vision of ripe fields of grain or other crops at harvest time. Nor would any orchard be planted or pruned without the image of all those bushels of fruit or nuts to come.

But Joey Massey has a vision for his Arkansas farm that goes beyond the bounty of his rice, soybean and wheat crops.

“My vision is that someday I will grow all my own energy — that this operation will become completely energy independent,” says Massey, who farms about 1,000 acres in northeast Arkansas. The key to this vision lies not amid his most productive farmland. Rather, his renewable energy goal is rooted in 80 acres of non-productive cropland that surrounds the rural airport that serves his county.

This airport land was growing nothing but weeds when Massey, who is also a licensed pilot, took it on a few years ago as something of a community service project. The idea was to spruce things up a bit — hopefully to even pull a crop from it to cover the expense of caring for the land.

Massey cut down the weeds and has tried his best to grow soybeans and wheat on the airport tract. But the fertility of the land is just too marginal to produce a decent crop, he says.

However, studies and experience have shown that marginal land such as this can produce a good stand of Miscanthus x giganteus (Miscanthus), a towering ornamental grass that has been grown profitably in Europe for the past decade as a bio-energy crop (see sidebar). Multiply this 80 acres of marginal land by tens of thousands of similar acres across Missouri and Arkansas, and the potential for a major new biofuel industry becomes apparent, Massey says.

Avoiding ‘food
vs. fuel’ debate
At this point in the conversation, Massey doffs his farmer’s hat and (figuratively speaking) puts on his hat as a director of MFA Oil Company. The fuel co-op has been hard at work for a number of years developing a plan to take on a larger role in the renewable fuels sector.

Representing the co-op’s Mid-South Region, Massey went to his first MFA Oil board meeting in Columbia, Mo., about four years ago, eager to raise the issue of getting the co-op more involved in biomass fuel. He even brought with him a copy of an editorial that aired on a local TV station that urged the state’s agriculture industry to more aggressively pursue biomass to help the nation grow its way toward a renewable energy future.

“The ‘food vs. fuel’ debate was really heating up that point,” Massey recalls, referring to critics of corn ethanol, who see an ethical dilemma in diverting food crops for energy use. At his first MFA Oil board meeting, Massey was happy to learn that the co-op had been studying the renewable fuel market for several years.

“At that time, we were primarily looking at switchgrass as a dedicated energy crop. But we soon changed our focus to Miscanthus, for a number of reasons,” Massey says. Unlike switchgrass, Miscanthus is non-invasive, so there should be no concerns about it escaping plots and “taking over the countryside,” he notes. Miscanthus thrives on marginal land that will not support traditional crops, and will do so with only 20 inches of rain per year and very little fertilizer once established.

“I keep looking for a negative aspect of Miscanthus, but I can’t find one,” says Massey. “It won’t displace any food crops, so we avoid the food vs. fuel debate. And we can harvest two to three tons more per acre than with switchgrass.” [Proponents of switchgrass counter that its big advantage is that it is much less expensive to establish].

“Bottom line, I am really excited about this project and what it could mean to farmers in this region.”

Time to gear up biomass
At MFA Oil headquarters in Columbia, co-op CEO Jerry Taylor shares Massey’s excitement for the Miscanthus/biomass energy project.

“The nation has to get the biomass industry growing, and we think this project represents a big step in that direction,” Taylor says. He cites a study that shows the project could have a $150 million economic impact and create 2,700 new jobs, with 1,700 family farmers growing the crop.

The fear that Miscanthus would be planted on productive cropland is not a real concern, Taylor says. “Frankly, it will not compete against $7 [per bushel] corn or $14 [per bushel] soybeans. And when you are talking about $100 [per barrel] oil, biomass can compete with petroleum.”

MFA Oil has established three separate project areas, each of which has at least 50,000 acres of marginal farmland suitable for growing Miscanthus. The projects areas are: Central Missouri (with Columbia being roughly in the center); Southwest Missouri and Northeast Arkansas. To sign up for the program, a farm needs to have at least 40 acres of marginal farmland that can be devoted to Miscanthus. If the 50,000 acres per project area is achieved, it should yield about 600,000 tons of biomass per year, per project area.

The co-op’s plan calls for each of these project areas to have its own processing plant, where the grass would be turned into biomass fuel pellets. The pellets would then be burned in powerplants, or burned to heat poultry houses. “The technology for processing pellets has been around for a long time; it is not complex,” Taylor says, adding that each of the plants would be “scalable,” so that they could be expanded as the number of acres in each project areas grows.

Each of the three project areas is a little different, Taylor explains. “In the Central Missouri project area, things are really being driven by the end market.” Both the city of Columbia and the University of Missouri have their own power plants that are facing mandates to use more biomass.

In the Northeast Arkansas project area, there is a great deal of marginal farmland along Crowley’s Ridge, Taylor says. “Today’s inputs are just too expensive to make a lot of that land viable for crop production. But it should do well growing Miscanthus.”

Bordering this hilly ridge are large areas of flat, productive rice and cotton country. But rice and cotton are “thirsty” crops, and a big concern is the falling level of the water table, which could threaten the future of irrigated agriculture in the area.

The fact that Miscanthus should get by with just normal rain levels in most years is another big plus for it. The only irrigation water it would likely need might be in the first year or two when the crop is being established, Taylor says. Indeed, Miscanthus can actually help capture excess rain water and sequester it back into the aquifer.

Poultry producers could benefit
In the Southwest Missouri project area, there is both a great deal of marginal farmland and a large poultry industry which is a ready-made market for the biomass fuel pellets.

One such poultry grower is Rusty Mulford, who raises 139,000 chickens annually. Mulford, an MFA Oil delegate (the co-op’s advisory body, just one step down from the board), has six poultry barns and 80 acres in the Ozarks, 60 acres of which he is ready to sign up to grow Miscanthus on.

He already burns biomass pellets to help heat his poultry houses. He figures his own farm will burn the equivalent of 20 acres of Miscanthus pellets each winter, leaving an additional 40 acres to generate a cash return.

When Rural Cooperatives spoke with Mulford in February, Missouri had just been through a prolonged, record- breaking cold spell. Frigid temperatures have a huge impact on the profitability of poultry production. Indeed, propane expense for winter heating is his largest single cost of production, Mulford says.

Luckily, he installed biomass fuel heaters in 2008 as a supplemental source of heat. He has been buying fuel pellets made from waste wood. During three weeks of intense cold, he calculates that those biomass pellet burners saved him $2,500 to $3,000 in propane bills.

Mulford is firmly behind MFA Oil’s biomass project. “As a farmer-owned energy co-op, MFA Oil has the connections to farmers and is well positioned to develop the additional infrastructure needed,” he says.

There is a great deal of land suitable for Miscanthus production in his region, Mulford says, including relatively small blocks of land broken up by vacation home developments. “That land just isn’t suitable for traditional crop production; but we believe it could grow Miscanthus.”

Co-op forms subsidiary
and partnership
MFA Oil has created a subsidiary to pursue the project: MFA Oil Biomass, a limited liability corporation that operates on new-generation co-op principles (the same business model used by most other grower-owned ethanol and biodiesel plants around the nation).

MFA Oil is partnering with Aloterra Energy LLC to undertake the project. Taylor says the co-op has a longstanding working relationship with the principals of Aloterra, a company which was formed last year to work on biofuel marketing, distribution and logistics issues. Aloterra will supply the rhizomes, or the bulb-like roots, from which the crop sprouts.

At some future date, the Miscanthus pellets might even be processed into ethanol. Miscanthus can yield three times more ethanol per acre than corn, according to Scott Coye-Huhn, director of business development for Aloterra Energy.

Processing Miscanthus into liquid ethanol is more complex than producing fuel pellets, but Taylor says ethanol could be “a huge market” for Miscanthus. Existing corn ethanol plants could be modified to use the pellets to supplement corn.

“Our strategy would be to not duplicate assets that already exist,” Taylor explains. “If the highest use of our members’ crop is to sell it to existing plants, that is what we will be doing. If the highest return for our growers is to invest in an additional ethanol plant, that is what we would do.”

Taylor notes that POET corporation, the nation’s second biggest ethanol processor, is currently experimenting with the use of corn stover (corn cobs and husks) to make cellulosic ethanol. MFA Oil does not see biomass as being a one fuel industry, hence Taylor does not view corn stover ethanol as a threat or competition to Miscanthus. “We hope they will make a commercial breakthrough for secondgeneration biofuel.”

For farmers, the biggest drawback of Miscanthus is the expense — about $600 per acre — to establish the crop, and then the three-year wait for full production. However, once established, the crop is basically self-sustaining for 20 years or more, Taylor says.

Planting and propagating the rhizomes requires special equipment, which the co-op is procuring so that it can perform these tasks for co-op members. The bamboo-like stalks of fully mature Miscanthus could prove hard to handle for average harvesting equipment, although some farmers might want to modify their existing gear to do it themselves. However, MFA Oil Biomass will have equipment available for specialty harvesting for members.

Since Miscanthus is harvested in the winter after the grass has gone dormant (following the first frost of the year), it would not compete for harvesting equipment in the same time window as other crops.

“It can be harvested just about any time from December through February, just as long there is not a lot of snow on the ground,” Taylor says. “Once the grass goes dormant, the nutrients go back into the rhizomes, which is the main reason it rarely needs to be fertilized.”

University supports project
As the vice provost for economic development at the University of Missouri in Columbia, Steve Wyatt’s job is to link the resources of the university with the private sector to improve the state’s economy. He has thus been very interested in working with MFA Oil on its Miscanthus biomass project. The university could be both a customer for the Miscanthus biofuel and a source for technological help to make the project happen, he says.

Another beneficial aspect of Miscanthus is that it helps to sequester carbon in the ground, Wyatt says. Promoting biomass energy meets two of the university’s five overall strategic goals: promoting food for the future and sustainable energy, he notes.

The university currently uses a 5- percent biomass mix with the coal that fuels its campus power plant in Columbia. That biomass supply comes in the form of 6,000 tons of waste wood products annually, including sawdust, old shipping pallets and brush.

But the school’s appetite for biomass will be soaring with the installation of a new furnace that will require 100,000 tons of biomass each year.

Wyatt anticipates that about onethird of the expanded biomass supply will continue to come from waste wood, another third from forest thinnings and one-third from special energy crops, such as Miscanthus. The university is seeking bids from potential biomass suppliers for the new broiler, which is expected to be operating by the end of 2012.

The University of Missouri is especially interested in helping to solve distribution and other logistical challenges facing the emerging biomass industry, Wyatt says.

USDA program could help
offset planting costs
The co-op’s biomass plan calls for use of USDA’s Biomass Crop Assistance Program (BCAP) to help farmers offset the cost of planting Miscanthus. Under BCAP rules, USDA can help farmers offset as much as 75 percent of the initial cost of planting a biomass crop and for land rent while the crop is brought into production. Once the crop matures, farmers would be eligible for two years of matching payments, up to $45 per ton beyond the selling price. (For more information on the program, visit: www.usda.gov/documents/ 11DLeyUSDAFSA.pdf.

Land in USDA’s Conservation Reserve Program (CRP) is not allowed in the BCAP program.

When interviewed in late February, Taylor was keeping a close eye on some efforts that could result in reduced funding for BCAP, or even its elimination. If that happens, he said the co-op would likely have to scale back the scope of the project. “Truthfully, we are concentrating on our ‘A’ plan right now, and it is based on successfully qualifying for BCAP.”

This situation raises the larger concern often heard among those in renewable energy that the U.S. needs to make a commitment to a long-term renewable energy program — one lasting 10 to 20 years. This type of firm policy foundation is needed if the private sector is to get behind secondgeneration biofuel the same way it rallied to corn ethanol, Taylor says.

“Right now, the country really just has energy programs, not a long-range energy policy, and those programs can change from administration to administration,” Taylor says. “What we are talking about here is displacing oil, two-thirds of which is imported and accounts for half of the nation’s trade deficit. These renewable energy programs are part of the solution, not the problem. All of the dollars generated by renewable energy projects like this stay local.

“When you add in doing a project like this with a cooperative business model, then all the dividends from profits also stay home when they are redistributed to the growers. That’s why this project has so much potential.”




Miscanthus facts

The following information was provided by MFA Oil Biomass LLC.
What is Miscanthus x giganteus? There are several varieties of Miscanthus commonly used in landscape design as an ornamental grass. Although it is from the grass family, like corn, it originated in Asia, like soybeans. It can grow in temperatures as low as 43 degrees and is estimated to last 20 years or more after the initial planting.
How is it planted and how does it grow? Miscanthus can be planted with a vegetable planter or a rhizome harvester. Land needs to be prepared prior to planting to reduce weeds. Fertilizer is optional in the first year, and is needed about once every three years. Weed control is needed the first two years, but in the third year and beyond, Miscanthus crowds out the weeds, eliminating the need for treatments.
Does it require irrigation? Usually not, once established. But in a dry season, it could need irrigation. MFA Oil Biomass says it will have irrigation equipment available and will work with member-farmers needing irrigation assistance.
How much tonnage does Miscanthus get? Farmers should consider 10-15 tons per acre a reasonable goal.




Energy mandates underlie push
for new energy crops

These state and federal legislative mandates are among the key “drivers” MFA Oil cites in pursuing a biomass energy program: Crops like Miscanthus also have a high value when used to replace petroleum-based plastics and other polymer products. Beyond plastics, many companies that currently use fibers and paper are researching replacing the materials with Miscanthus.





March/April Table of Contents